Since it is TAX time for all of us, I am sure you are also thinking of tax shelters.

I have spent some time looking for thebest 'single payment' insurance plan that one could invest in and claim tax deduction under Sec 80C.

I have put together this comparison chart that you can find by CLICKING HERE.

If you are also looking for such tax shelter, you may find this useful.

Single Invest Plans are ideal for those who:

Don't want committment to pay every year.

Travel often so cannot remember when the premium is due every year.

Have got some one time cash, like Maturing bank deposit, or chit fund, or sale of some property

Are businessman where you may not have regular cash flow to pay premium every year

Please keep in mind the following as you look at this enclosed document.

I am suggesting these policies only from the TAX Savings/investment point of view and NOT from LIFE Insurance point of view. These are market linked policies, meaning that your investment is subject to market risks.

The Act says that you NEED to take at least 5 times of your premium during the premium paying year for life cover (aka Sum Insured) if you want the entire allowed amount (up to Rs. 1 lac) be tax deductible under Sec 80C and by doing so, the money you get back at the end of the term (say, 10 years) will also be TAX FREE under Sec (10(10D)).

Please note that the sample illustration I have given assumes a constant 10% as the performance of the fund. By keeping the performance constant, you are able to see which company's charges are high and which company's charges are low - The higher the return the lower the charges.

If you really DO NOT want to actively manage the fund, then look for companies that offer balanced fund or funds that come with "Stop Loss" option. I can further help you with this later on if you need.

If you are older than 30 years and have children, consider taking the plan under your children's name so that the mortality charges would be minimal leaving most of your money for investment.

If you look at the sample illustration, Met Life and LIC figure as top companies in the Single Invest category as far as minimum charges and/or loyalty bonus are concerned.

THINK ABOUT THE FOLLOWING SCENARIO:

Let us assume that you are 35 years old. Every year, you invest in one single premium policy of Rs. 1,00,000 that is locked for 10 years. Say, you keep investing every year till you are 44 years. Then, from your 45th year onwards, you would be getting 100% TAX FREE money every year till you are 54 years because the money you paid when you were 35 years would come back to you when you are 45, what you paid at 36 would come to you at 46, and so on. By reinvesting this again and again (twice) till you are ready to retire (say 65 years) you get handsome TAX FREE return of Rs. TEN lakhs every year till you are 75.

I worked this out. For investing Rs. 1 lakh per year for 10 years (35 – 44 years of age), and reinvesting it twice(45-54 and again from 55-64, you will get about Rs. 10 lakhs per year (during 65 – 75 of age) for 10 years – ALL TAX FREE !!

Remember PENSION FUND IS TAXABLE!

But THIS IS TAX FREE.

Interested? Write me back. I would love to serve you and get your business.

Buying travel tickets, shares or doing financial transactions online may have become commonplace. But vending insurance online is not going to happen in a hurry.

Life and general insurers offer policies online and there are insurance broking firms that have portals such as Insurance mall, Click2Insure and Easy Insurance. Finally, there are third party aggregators such as PolicyBazaar.com, Apnainsurance.com that collect details of customers and pass it on to insurers for a fee. But insurance industry observers say that online sales of policy is a niche segment and would be less than 2 per cent of total premiums earned, though there is no accurate data.

Currently, policies bought online are overseas travel insurance, car insurance and to a small extent two-wheeler insurance. These policies are simple, easy to understand, short-term, and do not require medical verification from insurers. It is here that general insurers score over their peers in the life insurance segment.

General insurers offer a far wider range of insurance such as car, travel, health, home and personal accident. Life insurers offer basic simple term, health and pension policies.

Be it overseas travel or car insurance, it shows that people buy insurance only when it is mandatory and therefore it is still a product being “sold and not bought”.

The CEO of two-year-old portal Click2Insurance, Mr Rahul Agarwal, said online buying of insurance is yet to happen. Though sales is still small, about 2000 people visit the portal a day, which is about 50 per cent more than two years ago.

Digital Signature

If people have taken up to do banking transactions online it is because of the ease and convenience of the system.

Mr Narayanan, President of EasyInsuranceIndia.com, an year-old insurance portal, said they sold about 4,000 motorbike policies online – 40 per cent of the policies sold online. “We charge about Rs 100 extra but customers are willing to pay as it is hassle free to go online and renew the policy,” he said.

For car insurance, a problem crops during renewal. Most insurers would want to physically examine the car before renewing the policy.

Though the payment for buying is made online, “the hitch” is that the form has to be sent to the policyholder for signature as digital signature is not accepted, said Mr Niraj Jain, CEO and Principal Officer, Insurance Mall.

The sum insured is relatively small in car and overseas travel policies than in life or health insurance, so customers find it less risky to buy such policies online.

1.What is the life insurance cover you have? If it is not, at least, 10 times that of your total annual gross earnings, then you DO NOT have enough life cover.

2.You may have taken a life cover sometime back. Are you sure that it is enough if you consider today’s cost of living? You need to add up all your life insurance policies, at least, once every 5 years, to ensure that you have adequate cover based on your current lifestyle. Based on the assessment of your life insurance policies, consider purchasing additional term life insurance if you think you DO NOT have adequate cover

1.For how long would your family be dependent on your income? Let us assume that your spouse is also gainfully employed and that you have two children, ages, 12 and 8. For the younger one to graduate from college (say, after completing Masters) or get married or have a successful business for him/her and become financially independent, it would take another 15 years, at least.

In the above case, the first child should become financially independent in about 11 – 12 years, and the second child would be financially independent in another 15 years. Your spouse is probably already financially independent to take care of him/herself.

In the above scenario, you should have life insurance, at least for another 15 years, that is till your younger child becomes financially independent.